Think of patterns as beat or rhythm in music and think of dancing as steps to the rhythm or beat of the music. Regardless of which dance we choose, we follow a pattern around the dance floor be it the sidewalk or hardwood. A waltz will make a circular motion not unlike planets (the couple dancing) swirling around the sol or an imaginary sun using a large dance floor. A line dance will take an orderly line form with each individual doing the same step left, right, forward and back. In each case, even if an individual adds their own twist to the steps within the group, the pattern remains constant to the beat.
Likewise, The Tango and the Break Dance performed on the sidewalk will not look the same, yet each is danced with equal passion to the rhythm of the music. Both dances may be spontaneously started by dancers moved by street musicians, yet each has a certain historical expectation of steps the performers will generate. In other words, one does not try to Break Dance to a Tango or vice versa.
The watchers of dances and dancers are the audience who add to the expected outcome. It is because they perform vicariously with the activity that they add to support the expected steps the dancers will take, thereby supporting the current direction of the dance. If a dancer switches from the waltz to hip hop, it may be shocking whereupon one audience may leave and another group may gather and join in supporting the dancer's direction.
So it is on the chart. Each day has its beat and rhythm the traders may like and join.. Each day brings a change to the beat or just the tempo be it fast or slow, but no matter what the dance, there will always be an expected performance direction and an audience supporting the "dance".
Although on a chart a low number of trades begin the pattern, as more traders join, the watchers grow and the expectation will create a momentum. Once the current "dance" ends and another tune begins perhaps having a different rhythm, the original followers may leave the dance floor and become the watchers of the new group.
All dances added together create fluctuations and make up the chart patterns. Traders may come and go, the tempo may increase and decrease, but the desire to participate or watch will not change and the patterns on a stock chart will generally perform to their own rhythm and historically expected steps.
In the chart below, $NQ_F Shows a similar pattern we have today from February 5th completing April 15th with a bounce on March 27 to April 2nd before dropping to finish the pattern. The question is where are we on this current chart? Did we already have the bounce or are we about to have one? Therein lies the choice for participants of this dance.
|$NQ_F Similar Pattern Study|
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